Ferrari vs. Lamborghini: The Argument That Built Two Multi-Billion-Dollar Brands

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Hey Friends,

Many people think of business as a game or a sport. I get that. You’re typically competing against other entrepreneurs, attempting to win a prize — whether that be an important client, an additional dollar of revenue, or simply the pride and joy that comes with beating the competition.

But business can also be a war. Something so much more aggressive than your typical game that only the strongest entrepreneurs even dare to enter the arena.

We all know the classic examples. I’m talking about Netflix vs. Blockbuster, Coke vs. Pepsi, Nike vs. Reebok, eBay vs. PayPal, Facebook vs. Snapchat, and many others.

But there is another example that hardly anyone ever talks mentions. It involves two of the world’s most prestigious brands, and its origins date back more than 60 years.

I’m talking about Ferrari vs. Lamborghini — and here’s the story.

Let’s start with Enzo Ferrari. You guys are all probably familiar with him by now, right? Enzo was born in 1898 in Modena, Italy. He grew up with little to no formal education. He served in the Italian army during World War I, and he always dreamt of becoming a world-famous race car driver.

So after a short stint as a mechanic following his discharge from the Italian service, he finally made that dream come true. Enzo joined the racing department of Alfa Romeo in 1920, and he competed in several races throughout Italy over the subsequent years.

But he eventually developed a passion for the management and development side of the garage and recruited his own team of superstar drivers within the Alfa Romeo team — he called the group “Scuderia Ferrari.”

(Enzo Ferrari)

Enzo Ferrari competed sparingly over the next two decades and spent most of his time building cars for the Alfa Romeo team. But after a public dispute with Alfa’s managing director Ugo Gobbato, Enzo left the team in 1939 and went out on his own.

His contract with Alfa Romeo had a non-compete clause, restricting him from racing or designing cars for four years. Still, Enzo waited it out and decided to officially start making performance cars under the now-common Ferrari name in 1947.

But instead of going mass-market, he initially focused solely on racing.

The Ferrari team built an immediately competitive car. They entered the sport in 1948. Their first major victory came at the 24 Hours of Le Mans in 1949. They won their first Formula 1 Grand Prix in 1951 at Silverstone, and the Italian brand took home its first Formula 1 world championship in 1952.

(The Ferrari 500 D2 at Zandvoort in 1952)

But racing is expensive, so Enzo Ferrari started selling sports cars to finance the team.

And throughout the 1950s, the brand exploded in popularity. Ferrari became synonymous with luxury and premium performance, and every Italian businessman with a little bit of extra money wanted one of Enzo’s masterpieces.

Now, this is where Ferruccio Lamborghini comes in.

Ferruccio Lamborghini was a successful businessman and entrepreneur. He grew up on a farm in Northern Italy and served as a mechanic in the Italian Royal Air Force during World War II. But after the war, Ferruccio used his mechanical engineering education and his background in farming to start Lamborghini Trattori.

Lamborghini Trattori specialized in manufacturing agricultural equipment, specifically tractors, and the new company thrived financially during a period of agricultural and industrial revitalization in post-war Italy.

(Ferruccio Lamborghini)

Ferruccio Lamborghini was a great mechanic, entrepreneur, and businessman. But he was also a showman. The rumor is that he bought two Ferraris—one for him and one for his wife—that he would use to show off when attempting to close a big deal.

This eventually led to an argument with Enzo Ferrari, which led to the creation of two multi-billion-dollar luxury automobile brands. Here’s the story, as told by former Lamborghini employee Valentino Balboni to Car and Driver in 2018:

"When [Ferruccio Lamborhini] became a wealthy industrialist, he bought two Ferraris: a white one for him, and a black one for his wife," recalls Valentino Balboni. "Every time important customers used to come to the tractor company to sign contracts, he would take them to the restaurant while driving the Ferrari."

Balboni admits, with a chuckle, that Lamborghini liked to "make a show" but was generally not a very good driver. "He was always burning the clutch," says Balboni. That meant repeated trips to the nearby Ferrari factory to replace it. After the third or fourth visit, Lamborghini decided to have the clutch replaced at his own tractor company, by his own head mechanic.

After disassembling the Ferrari engine and transmission, Lamborghini's mechanic discovered that the clutch fitted on the Ferrari was identical to the clutch fitted onto one of Lamborghini's own small tractors.

"It was a commercial clutch, fitted on Maseratis, Ferraris, and all the sports cars of those days," Balboni explains. It also happened to be fitted onto a certain type of Lamborghini tractor. This did not sit well with Lamborghini, the disgruntled Ferrari owner.

"Ferruccio Lamborghini . . . he started yelling, he was so mad because he said, 'I pay for my tractor 10 lire [for this part], and I paid Ferrari 1000 lire for the same part.' So, one day, when he met Enzo Ferrari, the two started talking. During the discussion, Ferruccio Lamborghini had the bad idea to tell Enzo Ferrari, 'You build your beautiful cars with my tractor parts.' "

"Enzo Ferrari told him: 'You are a tractor driver, you are a farmer. You shouldn't complain driving my cars because they're the best cars in the world.' " This only infuriated Lamborghini, who became equally agitated and animated.

"Lamborghini told him, 'Oh, yes, I am a farmer! I'll show you how to make a sports car and I will do a sports car by myself . . . to show you how a sports car has to be.'

So the summary is this — Ferruccio Lamborghini owned two Ferraris, and after repeatedly burning the clutch, he asked his tractor mechanic to fix it. But when they disassembled the car, they realized Ferrari was using the same commercial clutch that Ferruccio used on his Lamborghini tractors. Except it cost 100x more from Ferrari.

Ferruccio got mad and confronted Enzo Ferrari about it. But after being insulted and told that he shouldn’t complain, Ferrucio took it personally and decided to launch his own performance car brand under the Lamborghini name.

Just a year later, in 1962, Automobili Lamborghini S.p.A. was founded in Italy, and its mission was abundantly clear — to “build the perfect car.”

(Ferruccio Lamborghini)

But that wasn’t the end of the rivalry. It was really just the beginning. The rumor is that Ferruccio Lamborghini also hand-picked some of Enzo Ferrari’s most talented engineers to come with him, and the two men never spoke to each other again.

Yet both the businesses have found extreme success and still compete 60+ years later.

Ferrari has dominated the Formula 1 circuit. They have 240 wins in F1, the most all-time. They have 15 World Drivers’ Championships, and they are undoubtedly the most successful engine manufacturer and overall team in the history of the sport.

Still, Lamborghini is no slouch either. The iconic Italian Brand made some of the most luxurious and high-performance cars during the 1960s and 1970s, and despite facing financial challenges through the early 1980s, they have remained situated atop the luxury and performance car category for nearly six consecutive decades.

And today, the two brands are bigger and more relevant than ever.

I love this story for one simple reason. Enzo Ferrari and Ferruccio Lamborghini built two of the world’s most iconic car manufacturers. But they fed off each other and used a seemingly small and meaningless argument to channel their ambition, determination, and competitiveness.

That led to the creation of more than $50 billion in total value, and ultimately, it’s what the sport of business is all. As they say, every great entrepreneur is a little crazy.

I hope everyone has a great day, and we’ll talk tomorrow.

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